Sandwich class refers to families who have a monthly income of between $25,001 and $50,000.

These families are ineligible for public housing schemes, but are unable to buy their own homes in the private market due to high property prices.

The Government estimated that there were about 45,000 sandwich class households in Hong Kong.

Under the scheme, the HKHS is able to buy land from the Government at 50 per cent of the market value so that it can build housing and sell the units at below-market prices to qualified applicants.

HKHS's property development manager Donald Hughes said sandwich class housing now represented the bulk of the department's works.

The first batch of 10,462 sandwich class housing units was scheduled for completion by 1997/1998, he said.

These units are being built on 11 development sites in Tsing Yi, Ma On Shan, Tseung Kwan O, Diamond Hill, Sha Tin, Kwai Chung and Ho Man Tin.

HKHS has secured a $7 billion loan at five per cent annual interest from the Government for land payment costs at several sites.

It is negotiating with the Planning Department and Lands Department to identify other development sites, including three potential lots in Kennedy Town, Ma On Shan and the West Kowloon reclamation area.

The ambitious sandwich class housing programme will make the HKHS a major supplier of new flats in coming years.

Analysts said the HKHS would compete with private developers, and that sandwich class flats would absorb part of the overall buying demand.

The first sandwich class housing project, Tivoli Garden in Tsing Yi, comprising 1,024 flats, was launched for sale in December 1994 and received more than 4,400 valid applications.

The flats will be ready for occupancy next month or January 1996.

Tivoli Garden was originally built as an HKHS flat-for-sale scheme, but converted into sandwich class housing to bring forward the supply of subsidised flats to middle-income families.

The second sandwich class project, Park Belvedere in Ma On Shan, near Sunshine City, is expected to be put on sale next month.

Mr Hughes said pricing and mortgage terms for Park Belvedere, comprising 882 units in four towers, had yet to be finalised.

But estate agents reckoned selling prices at $2,600 per square foot, a substantial discount to the $4,000 per sq ft for private-sector units in Ma On Shan.

Analysts said it was hoped that banks would provide up to 80 per cent mortgage financing to qualified buyers for Park Belvedere at concessionary interest rates.

For the Tivoli Garden sales, banks provided up to 80 per cent mortgage lending, which put the downpayment within reach of purchasers.

The mortgage loans were available at 0.25 percentage point below normal interest rates.

The Park Belvedere units measure 625 to 873 sq ft and are scheduled for completion by May 1997.

Mr Hughes said further projects under construction would go on sale next year.

He added that HKHS was striving to provide quality flats, varying from about 500 to 800 sq ft in size, at affordable prices.

Construction and finishing standards for sandwich class housing were comparable to private-sector flats, and included air-conditioning for living room and bedrooms, he said.

Modest clubhouse facilities would also be built for various projects, he said.

Analysts said better design and construction quality for sandwich class housing were vital in order to attract buyers and to distance the housing from the Home Ownership Scheme (HOS).

HOS provides even lower-cost housing units, but poor design and poor construction quality have dogged the programme.

Sandwich class housing flats are subject to a five-year resale restriction.

Upon resale, the discount on market value of the flat must be repaid to the Government.

Buyers have to go through a screening process in order to qualify for the scheme.

While the new sandwich class flats are being built, the Government has offered $2 billion in low-interest loans to allow another 4,000 middle-income families to buy homes on the open market.

But the subsidised housing programme has been attacked by critics who said it would help relatively well-off people - the sandwich class - at the expense of the lower income families.

With the property market's downturn and falls in home prices, some analysts suggested that the Government review its policy on sandwich class housing.

Michael Choi Ngai-min, managing director of Land Power International, said the scheme was introduced during a time when escalating residential prices made home ownership a distant dream for many people.

But the substantial drop in property prices since April last year had effectively reduced the difficulties the sandwich class was having in buying a home, he said.

'Market conditions have changed so the Government should review its policy accordingly,' he said.

Mr Choi said it was not impossible for the sandwich class to purchase units in the private sector, if they were not merely looking for larger units or better quality units in better locations.

For instance, selling prices for units at Flora Plaza in Fanling were within the reach of the middle-income families, he said.

He warned against further expansion of the sandwich class housing scheme, especially since a large number of private-sector flats were expected in coming years, which could keep home prices at reasonable levels.